KEENAN v SMITH [2022] NZHC 970

KEENAN v SMITH [2022] NZHC 970 [9 May 2022]IN THE HIGH COURT OF NEW ZEALANDGREYMOUTH REGISTRYI TE KŌTI MATUA O AOTEAROAMĀWHERA ROHECIV-2022-418-4[2022] NZHC 970IN THE MATTER of the Insolvency Act 2006IN THE MATTER of the bankruptcy of ANTHEAROSE KEENANBETWEEN ANTHEA ROSE KEENANAppellantAND RAYMOND BRUCE SMITHRespondentHearing: 9 May 2022Appearances: A R Keenan self-representedD W King for Respondent (Leave granted to not appear)Official Assignee (Leave granted to not appear)Judgment: 9 May 2022REASONS FOR JUDGMENT OF ASSOCIATE JUDGE LESTER[1] The bankrupt, Mrs Keenan, applied under ss 309(1)(a) and (b) of theInsolvency Act 2006 (the Act), for an order annulling her bankruptcy. Those sectionsof the Act provide:309 Court may annul adjudication(1) The court may, on the application of the Assignee or any personinterested, annul the adjudication if—(a) the court considers that the bankrupt should not have beenadjudicated bankrupt; or(b) the court is satisfied that the bankrupt's debts have been fullypaid or satisfied and that the Assignee's fees and costsincurred in the bankruptcy have been paid; or[2] I was satisfied an order under s 309(1)(b) of the Act should be made and suchan order was made when Mrs Keenan's application was called on 9 May 2022. I nowset out the reasons for that and why the order under s 309(1)(a) is not appropriate.Section 309(1)(a) of the Act[3] Mrs Keenan was bankrupted by a Judgment of Associate Judge Paulsen dated30 March 2022.1[4] My discussion on s 309(1)(a) assumes an understanding of that Judgment. Inshort, Mrs Keenan was bankrupted because she refused to pay a costs award of thisCourt. While Mrs Keenan had filed an appeal against the Judgment resulting in thecosts award, that appeal was not pursued. Prior to the appeal being abandoned,the judgment creditor issued a bankruptcy notice and while Mrs Keenan sent an emailto the Court denying she owed the debt, no challenge to the bankruptcy notice wasmade. The judgment creditor's application to adjudicate Mrs Keenan bankrupt wasfiled in March 2022 and was opposed.[5] Associate Judge Paulsen, in his reserved Judgment released 30 March 2022,considered each of the grounds raised by Mrs Keenan and concluded none of themjustified declining the order for adjudication sought.1 Smith v Keenan [2022] NZHC 618.[6] Two of the grounds not accepted by Associate Judge Paulsen are relied on byMrs Keenan in her application under s 309(1)(a). One is that the bankruptcy noticeresulting in Mrs Keenan's adjudication was issued while the appeal against the costsaward was alive. As Associate Judge Paulsen noted, no stay of enforcement wassought and an appeal does not operate as a stay.2 While Mrs Keenan may have feltaggrieved that the bankruptcy notice was issued while the appeal was alive, nochallenge to the bankruptcy notice was made and the judgment creditor was within hisrights to ask the Court to issue a bankruptcy notice. I do not accept this point supportsthe making of an order under s 309(1)(a)[7] The second point is that Mrs Keenan says she swore an affidavit for theadjudication hearing where she said she was not insolvent and therefore bankruptcywas not appropriate. Associate Judge Paulsen dealt with this point as follows:3Solvency[17] With respect to a debtor's ability or otherwise to pay her debts, theCourt has held that evidence of sufficient weight and clarity must be providedby the debtor.4[18] In her notice to oppose the adjudication order, Ms Keenan states"Courts are advised that I am not insolvent". That assertion is repeated in heraffidavit. However, apart from the bare assertion she is not insolvent, there isno other evidence as to her financial means or ability to pay the judgment debt.At the hearing, Ms Keenan asserted that she operates a business, owns herown home, and has good financial management skills, but there is no evidenceabout any of that before me. It follows that Ms Keenan has failed to establishthat she is solvent.[8] An application under s 309(1)(a) does not " provide a forum for a bankruptto relitigate the merits of the adjudication application".5 The hearing of the applicationfor adjudication was the time for Mrs Keenan to prove she was not insolvent. Theauthorities confirm a s 309(1)(a) application is not a chance to re-run the argumentsnot accepted at the adjudication hearing. That is what Mrs Keenan attempts to do byagain asserting she was not insolvent at the time of the order.2 Smith v Keenan, above n 1 at [25].3 Smith v Keenan, above n 1.4 Re Clarke, ex parte Commissioner of Inland Revenue HC Whangarei B151/95, 1 October 1996.5 Norris Ward McKinnon v Kaye [2016] NZHC 3089 at [38] noted in Brookers Insolvency Law &Practice (online ed, Thomson Reuters) at [IN309.06(1)].[9] I decline Mrs Keenan's application to be annulled under s 309(1)(a) of the Act.Section 309(1)(b) of the Act[10] Brookers Insolvency Law & Practice states:6The court may annul the adjudication if the court is satisfied that thebankrupt's debts have been fully paid or satisfied and the Assignee's fees andcosts incurred in the bankruptcy have been paid.[11] The Official Assignee's Report (the Report) was prepared at short notice sothat Mrs Keenan's application could be considered at the earliest possible hearing.7The Report confirms the judgment debt together with costs have been paid. TheReport refers to a debt disclosed by the bankrupt to a building company and materialprovided since the Report confirms that debt has also been paid in full. The Reportalso refers to the existence of another judgment debt relating to costs. Again, sincethe Report, confirmation that debt has been paid has also been provided.[12] No other debts have been identified. Provided the Official Assignee's costsand disbursements are met, the Official Assignee has no objection to annulment.[13] The judgment creditor and the Official Assignee were granted leave not toappear at the application. No other creditor has appeared and no other creditorappeared in support of the application for annulment.[14] As noted earlier, I was satisfied an order annulling Mrs Keenan's bankruptcyunder s 309(1)(b) of the Insolvency Act 2006 was appropriate and I made that order.The order was on the condition that the Official Assignee's costs and disbursementsidentified at paras 17 and 18 of the Report dated 2 May 2022 are to be paid from thefunds held by the Official Assignee before the balance is returned to Mrs Keenan.6 Brookers Insolvency Law & Practice, above n 5 IN309.06(2)].7 While Mrs Keenan sought that her application be dealt with on the papers, s 411 of the Act requiresthat an application for annulment be dealt with in open court.[15] Mrs Keenan, on 9 May 2022, told me she was concerned at the level of feescharged by the Official Assignee. I said I would record her concerns. Mrs Keenan isfree to take up that issue with the Official Assignee.[16] Accordingly, Mrs Keenan's adjudication was annulled pursuant to s 309(1)(b)of the Insolvency Act 2006 from 9 May 2022.______________________________Associate Judge LesterSolicitors:Lane Neave, ChristchurchCopy to:Mrs A Keenan, self-represented, HokitikaOfficial Assignee